Connecticut EV Tax Credit
Purchasing an electric vehicle in Connecticut can be cost-effective. In addition to federal EV incentives, the state offers rebates for EV purchases and installation of charging stations.
As one of the first states to adopt electric vehicles, Connecticut offers various incentives to make purchasing and operating an EV easier. These include state and local tax credits, rebates for charging stations, and discounted registration fees. These benefits help to offset the higher cost of purchasing an EV. The federal EV incentive, the Plug-in Electric Vehicle Credit or PEV Credit, is a $7,500 tax credit applied to new EV purchases or leases. This is a point-of-sale credit, which means it is available to eligible buyers at the time of purchase or lease.
The state also provides incentives for businesses that install charging infrastructure, including the 30% federal alternative fuel station equipment (AFSE) tax credit. Qualifying businesses can claim this credit on their business income tax return. This tax credit is available to both commercial and non-profit entities.
Connecticut EV Tax Credit Eligibility
To qualify for the credit, a new EV must meet certain requirements regarding assembly and sourcing. For example, you must own or lease an eligible electric vehicle that was manufactured after 2022 and meets certain requirements. In particular, the battery must be at least 50% American-made and sourced from a “country of origin” other than Canada or Mexico. Additionally, the battery components and critical minerals must be at least 40% American-made and sourced from a country of origin other than China. Low- and moderate-income individuals can save even more through the Rebate+ New program, which adds an additional $2,000 to the standard rebate for new EVs and $1,125 to the standard rebate for PHEVs.
Beginning in 2024, the EV credit can be claimed at the point-of-sale instead of as part of the annual tax return, which makes it more convenient for new-car buyers to take advantage of this opportunity. This change applies to both new and used EVs. EV buyers should note that the IRS is expected to issue new rules for claiming the credit this year. These may include stricter requirements for sourcing batteries and other parts, and could reduce the number of eligible vehicles.
Connecticut DEEP CHEAPR Program
In addition to the federal EV incentive, Connecticut also offers its own EV incentives for residents through CT DEEP’s CHEAPR program. This includes the CHEAPR Standard Rebate and a supplemental rebate for income-qualified buyers. Incentives for EV chargers and off-peak charging are also available through Eversource and United Illuminating. As a bonus, the state of Connecticut also offers a sales and use tax exemption for EVs. This is an excellent way to reduce the overall cost of owning and operating an EV in the state.
